Analyst Scott Berg from Needham maintained a Buy rating on SPS Commerce (SPSC – Research Report) and decreased the price target to $210.00 from $230.00.
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Scott Berg’s rating is based on several elements that influence SPS Commerce’s potential for investment. Despite a slightly lower than anticipated organic revenue growth projection for FY25, the company’s performance in the fourth quarter was solid, with revenues and EPS meeting expectations. The revenue guide aligns with the consensus and reflects a growth of 10% – 11%, although it falls short of the earlier expectation of over 13%.
Nonetheless, Berg is encouraged by SPS Commerce’s updated total addressable market (TAM) estimate of $11 billion, which helps mitigate concerns about market saturation. The belief that the company can maintain a long-term revenue growth rate above 10%, along with additional margin leverage, supports the Buy rating. While short-term growth forecasts have been adjusted downwards, the long-term growth prospects and market potential remain promising.